Thank Sequestration for a Smaller Deficit in FY 2015

The fiscal year 2015 federal budget is the U.S. government spending and revenue from October 1, 2014, through September 30, 2015. Spending totaled $3.688 trillion but revenue was only $3.250 trillion. That created a $438 billion budget deficit.

President Obama submitted the FY 2015 budget proposal to Congress March 4, 2014. This was a month late according to the budget process. Congress passed its $1.1 trillion spending bill December 13, 2014.

It appropriated funding for the discretionary budget for the rest of FY 2015. But it only funded Homeland Security through February 2015. That was in protest of President Obama's executive actions on immigration.

Here is a breakout of FY 2015 budget revenue and spending. It compares actual spending to the president's budget.

Tax Freedom Day occurred April 24 in 2015. That's the first day of the year that Americans earned more income than what they would pay in taxes.

Spending

The government spent $3.688 trillion. That's much less than the $3.9 trillion in the president's budget. One reason is sequestration limited discretionary spending to $1.1 trillion. It's also because mandatory spending was less than estimated. Here's the breakout.

These were established by prior acts of Congress, so they can't be changed without another act. A total of $2.301 trillion was spent. That's lower than the $2.458 trillion budgeted. Here's the breakdown:

Social Security was the largest. It cost $882 billion, lower than the estimate of $896 billion. It's 100 percent paid for by payroll taxes, so doesn't add to the deficit.

Medicare was next, at $540 billion. This was higher than the $526 billion first estimated. It's only 57 percent funded by payroll taxes and premiums.

Congress added $73.7 billion in Overseas Contingency Operations to pay for the Afghanistan War. It added $13.4 billion in emergency funding for disaster relief and other programs. OCO and emergency funding isn’t subject to sequestration or the discretionary budget limit.

The Bottom Line

Most of federal spending went toward mandatory ($2.612 trillion) and the military ($659.2 billion, since OCO spending isn't part of the discretionary budget). Add $80.2 billion for Health and Human Services. That's the agency that administers mandatory programs like Medicare, Medicaid, and the ACA.

Subtract them from the $3.759 trillion budget and it leaves just $407.6 billion for the rest of the federal government. That includes tax collection, educating the labor force, and upholding the law. Federal spending measures America's true priorities.

Military spending should also include the departments that support defense and OCO spending, as the table below shows.

Department

Budget (in billions)

Defense

$496.1

Veterans Affairs

$65.1

Homeland Security

$38.2

State Department

$40.1

National Nuclear Security Administration

$11.4

FBI

$8.3

Subtotal without OCO

$659.2

OCO

$64.3

TOTAL SECURITY

$723.5

Deficit

The OMB estimated the president's budget deficit to be $583 billion. Instead, it came in at $438 billion. That's because revenue came in much higher than projected, thanks to an improving economy which boosted tax receipts. Spending was slightly lower. A review of deficit by president reveals this was Obama's smallest deficit. A review of deficit by year reveals it was the smallest deficit since FY 2008.